Saint Arnold founder on fed court’s TABC ruling

There is some good news from Austin today: A federal judge has voided the Texas Alcoholic Beverage Commission’s long-standing ruling that the difference between “ale” and “beer” is a matter of alcoholic strength. The rule has long been ridiculed by brewers and has been cited as an impediment for out-of-state brewers to get their products to market here because of the expense of making special labels just to satisfy this quirk of Texas regulation.

“In a remarkable (though logically dubious) demonstration of circular reasoning, TABC attempts to defend the constitutional legitimacy of the Code through an appeal to the statutory authority of the Code itself.” Referring to the required use of the terms “beer”, “ale”, and “malt liquor”, he writes “TABC’s argument, combined with artful legislative drafting, could be used to justify any restrictions on commercial speech. For instance, Texas would likely face no (legal) obstacle if it wished to pass a law defining the word ‘milk’ to mean ‘a nocturnal flying mammal that eats insects and employs echolocation.’ Under TABC’s logic, Texas would then be authorized to prohibit use of the word ‘milk’ by producers of a certain liquid dairy product, but also to require Austin promoters to advertise the famous annual ‘Milk Festival’ on the Congress Avenue Bridge.’”

But the judge declined to strike down the prohibition on Texas brewers that wish to sell beer on site, the way wineries are allowed to. The Jester King lawsuit had claimed that was a violation of the Constitution’s Equal Protection Clause and the Commerce Clause:

The TABC never gave any reason why Texas should be able to prohibit craft brewers from selling beer to customers on-site, while allowing wineries to do so, or why Texas should be able to favor foreign wineries over foreign breweries, and Judge Sparks did not speculate on why that might be. But the legal standards are different and more demanding for challenges brought under the Equal Protection Clause than the First Amendment, and we were unable to persuade Judge Sparks to strike down these discriminatory laws. We were encouraged, however, by Judge Sparks’s observation that “The State of Texas is lucky the burden of proof was on [the Plaintiffs] for many of its claims, or else the Alcoholic Beverage Code might have fared even worse than it has.”

For some quick perspective, here is Saint Arnold founder Brock Wagner’s official response:

We are happy to see the silly definitions of “beer” and “ale” that the TABC unilaterally and nonsensically came up with be struck down. That has never made sense. That is really the only good news for us. The meat of the lawsuit from our perspective was denied, namely the part that said allowing wineries to retail and not giving breweries the same right is discriminatory. In reading the opinion, it is clear that not a lot of effort was put into winning this aspect of the lawsuit by the plaintiffs (Authentic and Jester King). This is puzzling.

There is a hidden expense to this lawsuit for all Texas breweries. The TABC is now going to have to come up with a new way of differentiating between beers that are above and below 4% alcohol by weight (which roughly translates into 5% alcohol by volume). There are some retail licenses in the state that only allow the sale of beers below 4% ABW. In fact there are some counties and precincts that only allow beers under 4%. This part of the law is quite legal. Once the TABC comes up with its method for signifying these categories, we will have to change all of our labels. This is not an enormous expense, but will probably cost us at least a few thousand dollars. All Texas breweries are going to incur a similar expense.

So, it looks like a bit of good news for the consumer and a bit of an expense for Texas brewers.